UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the quarterly period ended DECEMBER 31, 2005
                               -----------------

                                       Or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ________________to _________________

Commission File No. 0-8693
                    -----------


                              TRANSNET CORPORATION
                              --------------------

             (Exact name of registrant as specified in its charter)

           DELAWARE                                             22-1892295
--------------------------------                          ----------------------
(State or other jurisdiction of                              (IRS Employer
Incorporation or organization)                            Identification Number)

45 COLUMBIA ROAD, SOMERVILLE, NEW JERSEY                        08876-3576
----------------------------------------                  ----------------------
(Address of principal executive offices)                        (Zip Code)

Registrant's Telephone Number, Including Area Code:           908-253-0500
                                                              ------------

--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last Report

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                                                    Yes X  No __
                                                                        -

Indicate by check mark whether the registrant is an accelerated filed (as
defined in Rule 12b-2 of the Exchange Act)

                                                                    Yes __ No X
                                                                              -

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 3, 2006: 4,823,304.


<PAGE>


                              TRANSNET CORPORATION
                                    FORM 10-Q

                                TABLE OF CONTENTS



PART I.  FINANCIAL INFORMATION                                          PAGE NO.
------   ---------------------                                          --------

         Consolidated Balance Sheets
                  December 31, 2005 (unaudited) and June 30, 2005          1


         Consolidated Statements of Operations (unaudited)
                  Three Months Ended December 31, 2005 and 2004            2
                  Six Months Ended December 31, 2005 and 2004              3


         Consolidated Statements of Cash Flows (unaudited)
                  Six Months Ended December 31, 2005 and 2004              4


         Notes to Consolidated Financial Statements                        5


     Item 2.  Management's Discussion and Analysis                         7


     Item 4.  Controls and Procedures                                     12


PART II.  OTHER INFORMATION
-------   -----------------


     Item 6.  Exhibits and Reports on Form 8-K                            13

     Signatures                                                           13
     Certifications                                                       14



                                       I.


<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                            December 31,     June 30,
                                                                2005           2005
                                                          --------------- --------------
                                                            (Unaudited)
<S>                                                       <C>             <C>
ASSETS:
CURRENT ASSETS
Cash and Cash Equivalents                                 $  2,600,270    $  5,752,404
Accounts Receivable - Net                                    4,796,344       3,522,831
Inventories                                                  3,893,833       1,579,353
Other Current Assets                                           192,877          92,469
Deferred Tax Asset                                              23,513          98,183
                                                          ------------    ------------

TOTAL CURRENT ASSETS                                      $ 11,506,837    $ 11,045,240

PROPERTY AND EQUIPMENT - NET                                   628,639         701,563

OTHER ASSETS                                                   263,922         262,297
                                                          ------------    ------------

TOTAL ASSETS                                              $ 12,399,398    $ 12,009,100
                                                          ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:

Accounts Payable                                          $    483,041    $    465,656
Accrued Expenses                                             1,471,910         291,177
Income Taxes Payable                                            19,992          19,992
Floor Plan Payable                                             346,305       1,284,905
                                                          ------------    ------------

TOTAL CURRENT LIABILITIES                                 $  2,321,248    $  2,061,730

DEFERRED TAX LIABILITY                                          11,712          11,712

COMMITMENT AND CONTINGENCIES                                        --              --

STOCKHOLDERS' EQUITY:
Capital Stock - Common, $.01 Par Value, Authorized
15,000,000 Shares; Issued 7,408,524 at December
31, 2005 and June 30, 2005 [of which 2,585,220
are in Treasury at December 31 and June 30, 2005]               74,085          74,085

Paid-in Capital                                             10,574,670      10,574,670


Retained Earnings                                            6,570,518       6,439,738
                                                          ------------    ------------


Totals                                                      17,219,273      17,088,493
Less: Treasury Stock - At Cost                              (7,152,835)     (7,152,835)
                                                          ------------    ------------


TOTAL STOCKHOLDERS' EQUITY                                  10,066,438       9,935,658
                                                          ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 12,399,398    $ 12,009,100
                                                          ============    ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       1
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                         THREE MONTHS ENDED
                                                             DECEMBER 31,
                                                      -------------------------
                                                          2005         2004
                                                          ----         ----

REVENUE
Equipment                                             $ 4,678,762   $ 3,872,927

Services                                                3,825,272     3,790,351
                                                      -----------   -----------


Total Revenue:                                          8,504,034     7,663,278
                                                      -----------   -----------

COST OF REVENUE

Equipment                                               4,038,585     3,570,140

Services                                                2,712,432     2,746,990


Total Cost of Revenue                                   6,751,017     6,317,130
                                                      -----------   -----------


Gross Profit                                            1,753,017     1,346,148


Selling, General and Administrative Expenses            1,679,697     1,622,443
                                                      -----------   -----------


Operating Income (Loss)                                    73,320      (276,295)
                                                      -----------   -----------

Interest Income                                             7,139        10,680
                                                      -----------   -----------

Income (Loss) Before Tax Expense                           80,459      (265,615)

Income Tax (Benefit)                                       28,161      (124,403)
                                                      -----------   -----------

Net Income (Loss)                                     $    52,298   $  (141,212)
                                                      ===========   ===========

Basic Net Income (Loss)  Per Common Share             $      0.01   $     (0.03)
                                                      ===========   ===========

Diluted Net Income (Loss) Per Common Share            $      0.01   $     (0.03)
                                                      ===========   ===========

Weighted Average Common Shares Outstanding - Basic      4,823,304     4,805,804
                                                      ===========   ===========

Weighted Average Common Shares Outstanding - Diluted    4,916,505     4,805,804
                                                      ===========   ===========

See Notes to Consolidated Financial Statements.


                                       2
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                             SIX MONTHS ENDED
                                                                DECEMBER 31,
                                                       ---------------------------
                                                           2005           2004
                                                           ----           ----
<S>                                                    <C>            <C>
REVENUE
Equipment                                              $ 11,977,665   $ 10,489,015

Services                                                  7,608,229      7,867,490
                                                       ------------   ------------

Total Revenue:                                           19,585,894     18,356,505
                                                       ------------   ------------

COST OF REVENUE
Equipment                                                10,491,931      9,604,141

Services                                                  5,475,929      5,660,994

Total Cost of Revenue                                    15,967,860     15,265,135
                                                       ------------   ------------

Gross Profit                                              3,618,034      3,091,370

Selling, General and Administrative Expenses              3,438,942      3,324,193
                                                       ------------   ------------

Operating Income (Loss)                                     179,092       (232,823)
                                                       ------------   ------------

Interest Income                                              20,280         20,827
                                                       ------------   ------------

Income (Loss)  Before Tax Expense                           199,372       (211,996)

Provision for Income Tax (Benefit)                           68,591       (235,184)
                                                       ------------   ------------

Net Income                                             $    130,781   $     23,188
                                                       ============   ============

Basic Net Income Per Common Share                      $       0.03   $         --
                                                       ============   ============

Diluted Net Income Per Common Share                    $       0.03   $         --
                                                       ============   ============

Weighted Average Common Shares Outstanding - Basic        4,823,304      4,805,804
                                                       ============   ============

Weighted Average Common Shares Outstanding - Diluted      4,925,992      4,935,243
                                                       ============   ============
</TABLE>


See Notes to Consolidated Financial Statements.


                                       3
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                           SIX MONTHS ENDED DECEMBER 31,
                                           -----------------------------
                                                2005           2004
                                                ----           ----

OPERATING ACTIVITIES:

Net Income                                  $   130,781    $    23,188
                                            -----------    -----------
Adjustments to Reconcile Net Income
To Net Cash:
Depreciation and Amortization                   120,316         87,497
Provision for Doubtful Accounts                  30,000             --
Deferred Tax Benefit                             74,670       (235,184)

Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable                          (1,303,514)        (7,785)
Inventory                                    (2,314,480)      (324,506)
Other Current Assets                           (100,408)       (88,376)
Other Assets                                     (2,122)       (93,544)

Increase (Decrease) in:
Accounts Payable and Accrued Expenses         1,198,118        162,329
Other Current Liabilities                                           --
Income Tax Payable                                              (9,826)
                                            -----------    -----------
Total Adjustments                           $(2,297,420)   $  (509,395)
                                            -----------    -----------

NET CASH - OPERATING ACTIVITIES - FORWARD   $(2,166,639)   $  (486,207)
                                            -----------    -----------

INVESTING ACTIVITIES:
Capital Expenditures                        $   (46,895)   $  (183,208)
                                            -----------    -----------

NET CASE - INVESTING ACTIVITIES             $   (46,895)   $  (183,208)
                                            -----------    -----------

FINANCING ACTIVITIES -
Floor Plan Payable - Net                    $  (938,600)   $  (605,691)
                                            -----------    -----------

NET CASH - FINANCING ACTIVITIES             $  (938,600)   $  (605,691)
                                            -----------    -----------

NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS                        $(3,152,134)   $(1,275,106)

CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIODS                        $ 5,752,404    $ 7,064,644
                                            -----------    -----------

CASH AND CASH EQUIVALENTS AT
END OF PERIODS                              $ 2,600,270    $ 5,789,538
                                            -----------    -----------

Supplemental Disclosures of Cash Flow
Information:

Cash paid during the period for:

Interest                                             --    $        --

Income Taxes                                         --    $        --

See Notes to Consolidated Financial Statements.


                                       4
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a) Consolidation: The consolidated financial statements include the
     accounts of the Corporation and its wholly owned subsidiary, Century
     American Corporation. Intercompany transactions and accounts have been
     eliminated in consolidation.

     (b) Inventory: Inventory consists of finished goods. The Corporation's
     inventory is valued at the lower of cost (determined on the average cost
     basis) or market.

     (c) Cash and Cash Equivalents: For the purposes of the statement of cash
     flows, the Corporation considers highly liquid debt instruments, purchased
     with a maturity of three months or less, to be cash equivalents.

     (d) Earnings Per Share: Earnings per common share - basic are based on
     4,823,304 and 4,805,804 weighted shares outstanding for the three months
     ended December 31, 2005 and 2004, respectively, and 4,823,404 and 4,805,804
     weighted shares outstanding for the six months ended December 31, 2005 and
     2004, respectively. Diluted are based on 4,916,505 and 4,805,804 weighted
     shares outstanding for the three months ended December 31, 2005 and 2004,
     respectively, and 4,925,992 and 4,935,243 weighted shares outstanding for
     the six months ended December 31, 2005 and 2004, respectively.

     (e) In the opinion of management, the accompanying unaudited consolidated
     financial statements contain all adjustments consisting only of normal
     recurring adjustments necessary to present fairly the financial position,
     the results of operations and cash flows for the periods presented.

     (f) These statements should be read in conjunction with the summary of
     significant accounting policies and notes contained in the Corporation's
     annual report on Form 10-K for the year ended June 30, 2005.

     (g) The results of operations for the three months ended December 31, 2005
     are not necessarily indicative of the results to be expected for the entire
     year.

     (h) In November 2004, the Financial Accounting Standards Board ("FASB")
     issued SFAS No. 151, "Inventory Costs - an amendment to ARB No. 43." This
     statement provides guidance to clarify the accounting for abnormal amounts
     of idle facility expense, freight handling costs, and wasted material
     (spoilage), among other production costs. Provisions of ARB No. 43 stated
     that under some circumstances, items such as idle facility expense,
     excessive spoilage and other costs "may" be so abnormal as to require
     treatment as current period charges. This statement requires that those
     items be recognized as current period charges regardless of whether they
     meet the criterion of so abnormal. In addition, SFAS 151 requires that
     allocation of fixed production overheads to the costs of conversion be
     based on the normal capacity of the production overheads to the costs of
     conversion be based on the normal capacity of the production facilities.
     Adoption of the Statement is not expected to have a material impact on the
     financial statements of the Company.

     In November 2004, the FASB issued SFAS No. 152 "Accounting for Real Estate
     time-Sharing Transactions - An amendment of SFAS No. 66 and 67. This
     Statement amends SFAS No. 66. "Accounting for Sales of Real Estate, to
     reference the financial accounting and reporting guidance for real estate
     time-sharing transactions that is provided in AICPA Statement of Position
     (SOP) 04-2,


                                       5
<PAGE>

     Accounting for Real Estate Time-Sharing Transactions. This Statement also
     amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of
     Real Estate Projects," to state the guidance for (a) incidental costs and
     (b) costs incurred to sell real estate projects does not apply to real
     estate time-sharing transactions. The accounting for those operations and
     costs is subject to guidance in SOP 04-2. Effective for financial
     statements with fiscal years beginning after June 15, 2005. Adoption of
     this Statement is not expected to have a material impact on the financial
     statements of the Company.

     In November 2004, the FASB issued SFAS No. 153, "Exchanges of No monetary
     Assets - an amendment to APB No. 29." This Statement amends Opinion No. 29
     to eliminate the exception for no monetary exchanges of similar productive
     assets and replaces it with a general exception for exchanges of no
     monetary assets that do not have commercial substance. A no monetary
     exchange has commercial substance if the future cash flows of the entity
     expected to change significantly as a result of the exchange. Adoption of
     this statement is not expected to have a material impact on the financial
     statements of the Company.

     In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
     Payment" (SFAS No. 123R). SFAS No 123R requires companies to recognize in
     the income statement the grant date fair value of stock options and other
     equity-based compensation issued to employees. SFAS No. 123R eliminates the
     intrinsic value-based method prescribed by Accounting Principles Board
     Opinion No. 25, "Accounting for Stock Issued to Employees", and related
     interpretations, that the Company currently uses. SFAS No. 123R requires
     the Company to adopt the new accounting provisions beginning on July 1,
     2005. Management estimates that the adoption will not have a material
     impact on the financial statements of the Company.

     (I) At December 31, 2005, the Corporation had a stock-based employee
     compensation plan. The Corporation accounts for the plan under the
     measurement principals of APB Opinion No. 25, Accounting for Stock Issued
     to Employees, and related Interpretations. No stock-based employee
     compensation cost is reflected in net income, as all options granted under
     those plans had an exercise equal to the market value of the underlying
     common stock on the date of grant. The following tables illustrate the
     effect on net income and earnings per share if the Corporation had applied
     the fair value recognition provisions of FASB Statement No. 123 to stock
     based employee compensation.


                                       6
<PAGE>


                                                 SIX MONTHS ENDED
                                                    DECEMBER 31,
                                                 2005          2004
                                                 ----          ----

NET INCOME:
As Reported                                 $   130,781   $   23,188

DEDUCT:
Stock Based Employee Compensation Expense
Determined under the Fair Value Based
                                            -----------   ----------
Method - Net of Tax                                  --       (7,929)

                                            -----------   ----------
PRO FORMA NET [LOSS] INCOME                     130,781       15,259
                                            -----------   ----------

BASIC [LOSS] EARNINGS PER SHARE:
As Reported                                 $      0.03   $     0.00

Pro-Forma                                   $      0.03   $     0.00


DILUTED [LOSS] EARNINGS PER SHARE:
As Reported                                 $      0.03   $     0.00

Pro-Forma                                   $      0.03   $     0.00


                                                 THREE MONTHS ENDED
                                                     DECEMBER 31,
                                                 2005          2004
                                                 ----          ----

NET INCOME:
As Reported                                 $   52,298   $  (141,212)


DEDUCT:
Stock Based Employee Compensation Expense
Determined under the Fair Value Based               --            --
                                            ----------   -----------
Method - Net of Tax

                                            ----------   -----------
PRO FORMA NET [LOSS] INCOME                     52,298      (141,212)
                                            ----------   -----------

BASIC [LOSS] EARNINGS PER SHARE:
As Reported                                 $     0.01   $     (0.03)
Pro-Forma                                   $     0.01   $     (0.03)

DILUTED [LOSS] EARNINGS PER SHARE:
As Reported                                 $     0.01   $     (0.03)
Pro-Forma                                   $     0.01   $     (0.03)

(2.) INCOME TAXES

     The Corporation has a deferred tax asset of $23,513 and a deferred tax
     liability of $11,712 based upon temporary timing differences including
     inventory capitalization, allowance for doubtful accounts, vacation pay
     accruals and depreciation.


                                       7
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Revenues and earnings increased in the quarter and six-month period ended
December 31, 2005 as compared to the same quarter in the prior year, primarily
due to an increase in equipment sales. Revenues for the quarter ended December
31, 2005 were $ 8,504,034, an increase from $7,663,278 for the quarter ended
December 31, 2004. For the quarter ended December 31, 2005 the Corporation
reported net income of $52,298 as compared with a net loss of 141,212 for the
similar period in the prior fiscal year. Revenues for the six months ended
December 31, 2005 were $19,585,894 as compared with $18,356,505 for the same
period ended December 31, 2004, with net income of $130,781 for the six-month
period ended December 31, 2005, compared with net income of $23,188 for the same
period in the prior fiscal year. Results for the three and six month periods
ended December 31, 2004, included tax benefits of $124,403 and $235,184,
respectively.

During the quarter and six month periods, revenues from hardware sales increased
due to increased demand, primarily from the educational market. The pre-tax
earnings for the quarter ended December 31, 2005 increased to $80,459 from an
operating loss of $265,615 in the same period in the prior year, and for the six
months ended December 31, 2005 to $179,092 from an operating loss of $232,823 in
the prior year's period, due to the increased revenues and increased profit
margins on both hardware and service revenues. As a result of these increased
revenues and profit margins, gross profit increased by approximately 30% for the
quarter and 17% for the six month period ended December 31, 2005. Despite a
sluggish IT environment, the Corporation was able to increase revenue levels in
the 2005 quarter and six month period as compared to same periods in 2004, an
increase attributable to increased demand, primarily from the educational
market, particularly with respect to Internet protocol communications ("IPC")
products and services [including Voice over Internet Protocol ("VoIP" and IP
Telephony products and services]. Service related revenues for the three and six
month periods continued to be impacted by project delays and a reduction in
business from a major customer, as discussed below.

During the December 2005 quarter, the Corporation initiated new projects and
continued work on existing awards for IPC products and services. The performance
of these projects will extend over several quarters. Management notes that some
of these projects have been effected by construction delays beyond the
Corporation's control, and these delays have resulted in inventory increases and
an order backlog. None of these delays have had any significant impact upon the
operations of the Corporation. In addition to orders and awards already
received, indications of interest have been received by existing and prospective
clients with respect to IPC products and services and security technology, areas
which management has targeted as growth areas for the Corporation. Although
requests for quotations have increased in the past few months and management is
cautiously optimistic, assurances cannot be given that all quotations will
produce orders.

The net loss for the quarter ended December 31, 2004 was primarily attributable
to increased selling, general and administrative expenses, which increased
primarily as a result of the Corporation's expansion of its sales staff based
upon its anticipated growth in the Internet telephony marketplace. The income
for the six-month period ended December 31, 2004 was attributable the income tax
benefit. The income tax benefit was primarily derived from the Corporation
decreasing the deferred tax asset valuation allowance recorded at June 30, 2004.
The decrease in the deferred tax asset valuation allowance was recorded in
proportion to those existing net operating losses that the Corporation currently
expects to realize in connection with certain IRS carry back provisions.


                                       8
<PAGE>

With respect to selling, general and administrative expenses, expenses remained
relatively constant at approximately 20% of revenues for the December 2005
quarter, despite slightly increased costs, as compared to approximately 21% of
revenue for the December 2004 quarter. For the six months ended December 31,
2005, selling, general and administrative costs were approximately 18% of
revenue, the same as the six month period ended December 31, 2004. Expenses for
all the referenced periods reflect the Corporation's expansion of its sales
staff based upon its anticipated growth, particularly in business related to the
convergence of voice, video, and data networks in the IPC marketplace.
Management continues its efforts to control and reduce administrative and
personnel related costs.

As part of the industry competition pressures discussed herein, management
continues to see certain erosion in business related to Fortune 500 customers as
those customers enter into and/or expand business relationships with large
global partners. As part of this erosion, the Corporation's largest customer, a
Fortune 500 company, signed an agreement with a global support organization that
encompasses some lower margin work previously awarded to TransNet. While the
Corporation will still have a significant presence at this client's locations,
overall service billing to this client will be reduced. The overall reduction
and resulting effects on the Corporation's operations are not known at this
time. Although management believes that its focus on higher margin services
related to IPC and security will lead to continued growth and opportunities that
will help compensate for this reduction, no assurances can be given that the
Corporation will be able to replace the loss of a significant amount of business
from this customer, should that occur, or that such operations will not be
adversely effected.

Management continues its concentration on sales of sophisticated network and
system integration products which yield higher profit margins, and continues
adherence to and implementation of cost control measures. To maximize profit
margins, management consistently works to obtain the best discounts available to
it on hardware purchases from its distributors. Management also utilizes new
trends such as manufacturers' direct shipment and billing of the customers in
exchange for payment to the Corporation of an "agency fee" as a means to reduce
equipment related costs while increasing profits. Management believes that this
approach, although it may impact revenues, insulates the corporation from
challenges which may accompany sudden price decreases, hardware obsolescence and
delays collection of receivables.

During the last several years, the computer industry has experienced a trend of
decreasing prices of computers and related equipment. Management believes that
this trend will continue, but hopes to offset these decreases by expansion of
its IPC sales. Industry wide, the result of price erosion has been lower profit
margins on sales, which require businesses to sell a greater volume of equipment
to maintain past earning levels. Another result of the price decreases has been
intensified competition within the industry, including the consolidation of
businesses through merger or acquisition, the initiation of sales by many
manufacturers directly to the end-user, and the entrance of manufacturers into
technical services business. Management believes that the adoption of policies
by many larger corporate customers, which limit the number of vendors permitted
to provide goods and services for specified periods of time, has further
increased price competition.

During the periods discussed, the IT industry as a whole was impacted by a
significant slowdown in client spending. Clients have begun to scrutinize their
IT spending and the related returns on investments before incurring new
expenses. Management believes that future spending will be subject to specific
criteria, but also believes that as single source provider, the Corporation will
be in a better position to satisfy client demands for cost-effectiveness and a
suitable return on investment. Service related revenues, a material segment of
revenues, are significant in their contributions to net income because these
operations yield a higher profit margin than equipment sales. For the fiscal
quarters discussed, revenue from the provision of service, support, outsourcing
and network integration was largely attributable to the Corporation's service
contracts with a number of corporate customers to provide service and support
for the customer's personal computers, peripherals and networks. Most of these
contracts are short-term, usually twelve months or less, and contain provisions
which permit early


                                       9
<PAGE>

termination. Although the contracts generally contain renewal terms, there is no
assurance that such renewals will occur. Recently, management has noted a
transition to project-based rather than contract based business with respect to
certain support services. Accordingly, the Corporation must rely more upon
projects as a source of revenues. Industry changes have also diminished the
demand for certain legacy support services, such as help desk, as demand for
services such as those related to VoIP systems and call centers has increased.
The Corporation has modified its service offerings in response to these industry
fluctuations, and has recruited experienced systems engineers and project
managers to respond to increased VoIP projects.

The Corporation's performance is also impacted by other factors, many of which
are not within its control. These factors include: the short-term nature of
client's commitments; patterns of capital spending by clients; the timing and
size of new projects; pricing changes in response to competitive factors; the
availability and related costs of qualified technical personnel; timing and
customer acceptance of new product and service offerings; trends in IT
outsourcing; product constraints; and industry and general economic conditions.

LIQUIDITY AND CAPITAL RESOURCES

There are no material commitments of the Corporation's capital resources.

The Corporation currently finances a portion of its accounts receivable and
finances purchases of portions of its inventory through floor-planning
arrangements under which such inventory secures the amount outstanding. Floor
planning payables decreased in the 2005 period compared to the same period in
2004 as the result of purchases conducted through other channels. Inventory
increased in the quarter and six months ended December 31, 2005 as compared to
the corresponding periods in 2004 as a result of open orders pending at the end
of the periods.

Accounts receivable increased for the quarter and six months ended December 31,
2005 as compared to the same periods in 2004 as a result of increased sales.
Corresponding with the increased accounts receivables, cash levels decreased in
the three and six months ended December 31, 2005 as compared to the same period
in 2004, as funds were used to finance hardware sales and inventory required to
full customer orders. Accounts payable increased in the first quarter of fiscal
2005 as compared to the same quarter in fiscal 2004 as a direct result of the
increase in inventory at the end of the quarter.

Management continues its efforts to control administrative and personnel related
costs.

Interest income, not a material source of income, decreased in the 2005 quarter
as compared to the same periods in 2004, due to lesser amounts invested, and
decreased in the six months ended December 31, 2005 as compared to 2004
primarily due to lesser amounts invested.

Cash levels decreased in the three and six-months periods ended December 31,
2005 as compared to the corresponding periods in 2004 as a result of increased
accounts receivables and payables as a result of increased hardware sales and
increased inventory.

For the fiscal quarter and six months ended December 31, 2005, as in the similar
periods in the prior year, the internal resources of the Corporation were
sufficient to enable the Corporation to meet its obligations.

IMPACT OF INFLATION

The effects of inflation on our operations were not significant during the
periods presented.


                                       10
<PAGE>


       CONTRACTUAL OBLIGATIONS
<TABLE>
<CAPTION>

                                                 LESS THAN           1-3          3-5           MORE THAN
       CONTRACTUAL OBLIGATIONS     TOTAL          ONE YEAR          YEARS        YEARS           5 YEARS
       -----------------------     -----          --------          -----        -----          ---------
<S>                           <C>                 <C>            <C>          <C>               <C>
       Real Estate Lease      $1,036,847          $170,690       $371,210     $371,210          $123,737

       Office Equipment          $12,560             7,010         $5,550           --                --
</TABLE>


CRITICAL ACCOUNTING POLICIES

The Corporation's financial statements are prepared in accordance with
accounting principles that are generally accepted in the United States. The
methods, estimates, and judgments used in applying these most critical
accounting policies have a significant impact on the results reported in the
financial statements. The Securities and Exchange Commission has defined
critical accounting policies as policies that involve critical accounting
estimates that require (a) management to make assumptions that are highly
uncertain at the time the estimate is made and (b) different estimates that
could have been reasonably used for the current period, or changes in the
estimates that are reasonably likely to occur from period to period, which would
have a material impact on the presentation of our financial condition, changes
in financial condition or in result of operations. Based on this definition, the
most critical policies include: revenue recognition, allowance for doubtful
accounts, and valuation of deferred tax assets.

REVENUE RECOGNITION
TransNet recognizes revenue in accordance with SEC Staff Accounting Bulletin No.
104. Revenue from sales of hardware is recognized when the rights and risks of
ownership have passed to the customer, who is upon shipment or receipt by the
customer, depending on the terms of the sales contract. Revenue from services is
recognized upon performance and acceptance after consideration of all the terms
and conditions of the customer contract. Service contracts generally do not
extend over one year, and are billed periodically as services are performed.
Shipping and handling costs are included in the cost of sales.

ACCOUNTS RECEIVABLE
Accounts receivable are reported at their outstanding unpaid principal balances
reduced by an allowance for doubtful accounts, based on certain percentages of
aged receivables. We estimate doubtful accounts based on historical bad debts,
factors related to specific customers' ability to pay and current economic
trends.


                                       11
<PAGE>


VALUATION OF DEFERRED TAX ASSETS
At June 30, 2005, we have a valuation allowance of approximately $808,918
primarily to reduce our deferred tax asset, which is based on a net operating
loss carry forwards of $2,020,000 to an amount that will more likely than not be
realized. These net operating loss carry forwards have varying carry forward
periods and restrictions on usage. The estimation of future taxable income and
our resulting ability to utilize net operating loss and tax credit carry
forwards can significantly change based on future events, including our
determinations as to the feasibility of certain tax planning strategies. Thus,
recorded valuation allowances may be subject to material future changes.

THE MATTERS DISCUSSED IN MANAGEMENT'S DISCUSSION AND ANALYSIS AND THROUGHOUT
THIS REPORT THAT ARE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT MANAGEMENT
EXPECTATIONS THAT INVOLVE RISK AND UNCERTAINTIES. POTENTIAL RISKS AND
UNCERTAINTIES INCLUDE, WITHOUT LIMITATION: THE IMPACT OF ECONOMIC CONDITIONS
GENERALLY AND IN THE INDUSTRY FOR MICROCOMPUTER PRODUCTS AND SERVICES;
DEPENDENCE ON KEY VENDORS; CONTINUED COMPETITIVE AND PRICING PRESSURES IN THE
INDUSTRY; PRODUCT SUPPLY SHORTAGES; OPEN-SOURCING OF PRODUCTS OF VENDORS; RAPID
PRODUCT IMPROVEMENT AND TECHNOLOGICAL CHANGE, SHORT PRODUCT LIFE CYCLES AND
RESULTING OBSOLESCENCE RISKS; TECHNOLOGICAL DEVELOPMENTS; CAPITAL AND FINANCING
AVAILABILITY; AND OTHER RISKS SET FORTH HEREIN.









ITEM 4.  CONTROL AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer of the Corporation have
concluded, based on their evaluation as of December 31, 2005, that the
Corporation's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Corporation in the reports filed or
submitted by it under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
Corporation in such reports is accumulated and communicated to the Corporation's
management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the Corporation's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation.


                                       12
<PAGE>

                                     PART II
                                OTHER INFORMATION



ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

         A. Exhibits -
             31.1 Certification required by Section 302
             31.2 Certification required by Section 302
             32 Certification required by Section 906

         B. Reports on Form 8-K -
             On November 14, 2005, TransNet Corporation filed a Form 8-K under
             Item 9.



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                     TRANSNET CORPORATION
                                     (Registrant)


                                     /s/ STEVEN J. WILK
                                     -------------------------------------------
                                     Steven J. Wilk, President and
                                     Chief Executive Officer


                                     /s/ JOHN J. WILK
                                     -------------------------------------------
                                     John J. Wilk,
                                     Principal Financial and Accounting Officer
                                     And Chairman of the Board of Directors



DATE:  February 13, 2006


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